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Fratelli Vineyards ends FY26 with a stronger Q4 and a clear FY27 breakeven push

Fratelli Vineyards closed FY26 with a quarter that looked far healthier than the year as a whole. In Q4FY26, net revenue from operations rose to INR 36.3 crore, up from INR 32.0 crore in Q4FY25, a year-on-year growth of about 13%. For the full year, revenue was largely flat at INR 184.1 crore versus INR 181.9 crore in FY25, reflecting a year shaped by regulatory disruptions and policy changes in key markets.

Profitability remained a work in progress. FY26 gross margins stayed strong at 78.4%, broadly in line with the prior year, but the company still reported a net loss. PAT for FY26 stood at negative INR 15.8 crore (FY25: negative INR 12.8 crore). The key bridge was in the operating line: FY26 EBITDA improved to INR 1.06 crore from INR 0.23 crore, while Q4 EBITDA losses narrowed sharply to negative INR 3.7 crore from negative INR 7.1 crore. Management attributed the quarter’s improvement to tighter cost control, improved market conditions in several states, and better operating efficiency.

The headline takeaway from the management commentary was simple: the business appears to have stabilised operationally, and the company is now pushing for scale-led profitability in FY27.

FY26 was disrupted, but Q4 showed normalisation

Management pointed to regulatory disruptions in Telangana and Maharashtra during the first half of FY26, along with excise policy changes in Uttarakhand, as key reasons for muted full-year growth. The improvement in Q4 was linked to a normalisation in Telangana after retail license renewals, with management noting about 30% growth in the state during the quarter. Haryana, Uttar Pradesh and Kerala were also called out as strong performers, while the export business more than doubled in Q4.

The financial results show the operating trend clearly. Gross profit in Q4FY26 increased to INR 28.8 crore from INR 23.6 crore in Q4FY25, and gross margin expanded to 79.3% from 73.8%. On the cost side, finance and depreciation remained elevated. FY26 finance cost rose to INR 13.5 crore (FY25: INR 10.6 crore), and depreciation increased to INR 8.8 crore (FY25: INR 7.2 crore), both tied to borrowings and commissioning of new assets during the year.

Financial summary (Standalone)

Premiumisation remains the core strategy, with luxury driving growth

Fratelli highlighted that Premium and Above continued to contribute more than 70% of overall revenue in FY26. The company’s luxury portfolio (wines above INR 2,000 MRP) grew 15% year-on-year, led by J’NOON, which management said grew 44% in FY26. Sette delivered 5% year-on-year growth.

FY26 also saw portfolio actions intended to strengthen brand equity at the top end. Fratelli Brut, a new sparkling wine positioned at around INR 1,500 MRP, was launched in November 2025 and expanded to four states by Q4FY26. The company targets wider presence in FY27. Separately, Fratelli’s collaboration with designer Manish Malhotra commemorated 15 years of Sette through a limited-edition collector’s bottle, offered at around INR 3,500 and available across five states post launch. Management indicated a plan to expand to additional states during FY27.

The premium segment, however, faced pressure. Management stated premium portfolio revenue declined by roughly 15% to 16% year-on-year in FY26, primarily due to regulatory disruptions across Maharashtra, Telangana, Uttarakhand and Delhi, partially offset by growth in Haryana, UP, Kerala and Sikkim.

Shotgun RTD is now positioned as the second growth engine

The most material strategic shift highlighted in both the presentation and concall was the scale-up of RTD. Shotgun, introduced as a wine-based RTD, sold approximately 100,000 cases in its first year. Management stated the RTD segment contributed about INR 18 crore to the FY26 topline. The company also disclosed that Shotgun distribution expanded across 18 states and reached about 9,000 outlets.

Management positioned RTD as the fastest-growing alcobev category and pegged the wine RTD market at roughly INR 500 to 600 crore. Shotgun’s market share was stated at about 6% as of March 31, 2026, based on data from states where it is present. The company’s stated near-term plan is to double RTD sales in FY27 to cross 200,000 cases, supported by distribution expansion and new variants.

The company also acknowledged the margin implication of mix. Management stated RTD gross margins are close to 70%, and as RTD scales, overall gross margins are expected to remain in a 76% to 80% band.

Distribution, CSD and exports are the supporting levers

Fratelli stated it has expanded its overall distribution to 31,000 touchpoints, with Shotgun present in over 9,000. Management suggested Shotgun’s outlet count could move above 15,000 by around H2.

The CSD channel remains meaningful. The presentation stated CSD contributed 8% to topline, and management expects this contribution to rise as more brands are listed. During Q4FY26, Tilt Red, Tilt Bubbly Rosé and Shiraz Rosé were added to CSD. Merlot and Noi Sparkling received approvals with sales expected from H1FY27 onward, and Shotgun is expected to commence sales through CSD from H2FY27.

Exports are another incremental driver. The company expanded presence to 15 countries and stated export revenue doubled in FY26. Management guided that exports are expected to contribute 5% of total revenue from FY27 onward.

Capex cycle is largely behind, but hospitality remains a large swing factor

Management said FY26 capex was about INR 10 crore, covering vineyard infrastructure, plant and machinery and other operational infrastructure. The company indicated its major capex cycle is largely behind it, and that the infrastructure created over recent years should support growth needs for the next about three years. For FY27, management indicated routine and strategic capex of about INR 9 crore, and elsewhere on the call referenced a range of INR 6 to 10 crore.

A longer-term optionality is hospitality. Vision 2030 includes a hospitality project in the planning stage, with estimated investment of INR 70 to 80 crore. Management said the project has been deferred by about a year and may be reviewed in H2, with possible initiation in calendar year 2027 to 2028.

What management is guiding for FY27

The FY27 message was explicit and numeric. Management guided for about 30% revenue growth in FY27 and expects PAT breakeven for the year. They also stated that net-net breakeven is achievable at about INR 240 crore revenue. This implies a scale-led profitability plan rather than a margin-led reset, supported by operating leverage as the cost structure is described as ready to absorb significantly higher volumes.

The near-term execution variables are clear from the commentary. One is the pace of normalisation in states that saw disruption in FY26. Another is the ability to scale Shotgun distribution and maintain momentum after the first-year launch burst. A third is the trajectory of finance costs and depreciation, which were elevated in FY26 due to the capex cycle and borrowings.

Fratelli enters FY27 with strong gross margins, a luxury portfolio that is growing faster than the base business, and a new RTD line that already contributes a visible revenue base. The company’s own benchmark is straightforward: reach about INR 240 crore of revenue and the P&L should turn net-net breakeven.